Platinum is making headlines as the state of South African mines is uncertain due to labor tensions. Exchange traded funds tracking platinum are one of the best ways to gain exposure to the most expensive metal trading.
“Much uncertainty lingers in the South African platinum mining sector, and this justifies keeping a big chunk of the supply premium in place for now,” Edel Tully, UBS analyst, said in a report.
Platinum prices have been on the rise since early August. The latest news from South Africa’s mining sector has verified there is a labor strike in place and production has been halted. South Africa is the world’s largest platinum producer. Platinum is most commonly used in catalytic converters in autos, and is also used in jewelry and various cell phone and computer parts.
The strike at Lonmin has also produced numerous other protests at various platinum producers. As of Monday morning, platinum prices were up 20% in Europe, rallying 8.5% since last week, reports Francesca Freeman for The WSJ. [Why Platinum ETFS are up 20% This Year]
“The only strategy to have right now is ‘trading’ platinum here from one headline to the next, as the risk of both positive and negative headlines emerging and having the potential for a considerable impact deters ‘investment’ in the metal,” Tully said. [The Outlook for Platinum, Palladium ETFs]
There is currently one ETF trading that physically holds platinum. Physical Platinum Shares (NYSEArca: PPLT) is the largest platinum ETF trading, and does not invest in futures contracts. The fund costs 0.60% and has $878 million in AUM. The ETF has made investing in platinum more affordable for retail investors, reports Daniela Pylypczak for Seeking Alpha. [Platinum, Palladium ETFs Caught in Risk Off Trade]